Deregulation led to higher prices and worse service, New York lawmakers claim.

Dozens of lawmakers, municipal officials, and consumer advocacy groups want a thorough investigation of New York's phone system, accusing Verizon of raising prices substantially while allowing landline service to deteriorate throughout the state.

Rate deregulation has harmed customers, the lawmakers and groups wrote in a petition last week to the New York Public Service Commission (PSC).

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"For example, in New York City customer phone bills, since 2006 the price of residential ‘dial tone’ service (one line item on the bill) went up 84 percent, while other services, such as inside wire maintenance, went up 132 percent," the 20-page petition said.

Verizon has been shifting wireline service from copper to fiber and building out its cellular network, but in the process it's leaving many consumers behind, the petition claims.

"Telecommunications providers tout the reliability of fiber optic networks, and the marketplace is full of claims for the desirability of wireless service," the petition said. "But millions of New Yorkers continue to rely on a network that runs on copper for voice and data services. That copper network is becoming increasingly deteriorated, is not adequately maintained, and the quality of service received by millions of people in the State is getting worse each year." The letter quotes New York Attorney General Eric Schneiderman and previous PSC documents that say Verizon failed to meet quality standards.

The petition was signed by 49 State Assembly members (out of 150), seven State Senate members (out of 63), and a member of Congress, US Rep. Tim Bishop (D-NY). Mayors and other officials representing a dozen cities, towns, and counties signed the letter, as did consumer advocacy groups including the AARP and Common Cause New York. The letter was also signed by the New York State AFL-CIO and a Communications Workers of America representative.

The petition asks the PSC to start a new proceeding examining "the successes and failures of the competitive model adopted by the Commission." The commission "repeatedly assert[ed] that competition will drive improved service," but that has not happened, the petition says.

A PSC representative told Ars the commission is reviewing the letter, but the rep pointed out that in March PSC already announced a study on the state's telecommunications system. The study, to be completed by March 2015, will ask whether the state's regulatory system can "protect the interests of customers and whether current laws or regulations should be changed or amended to enhance or strengthen oversight and regulation over the entire telecommunications industry," the PSC website says.

Further Reading

The lawmakers and consumer advocacy groups want the PSC to take a close look at Verizon's finances. "Most recently, Verizon filed its 2013 financial report with the Commission," they said. "Schedule 12 shows a decrease in operating expenses of about $3.8 billion from 2012 and an overall profit of $1.2 billion up from a previous year loss of $2.6 billion. In the absence of a formal, litigated proceeding, there is no way to know why or how this change occurred, what it tells about market conditions, price and investment."

In response to the petition, a Verizon spokesperson told Ars: "The petition offers a combination of misleading or unsupported allegations, faulty analyses, and counterproductive public policy recommendations. In addition, the Public Service Commission has already announced that it is conducting a comprehensive review of the communications industry in New York and of the regulatory framework that governs that industry, so any separate examination of these claims in isolation would be a waste of agency resources. The coalition’s opinions should be treated as comments submitted in that proceeding, so that the PSC can evaluate it in the broader context of its staff’s own research and the views of other interested parties."